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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Ed = 8 - infinite change in demand to price change
Comparative Advantage
Increasing Cost Industry
Perfectly elastic
Implicit costs
2. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Long Run
Production function
Perfect competition
Substitute Goods
3. Ed > 1 - meaning consumers are price sensitive
Decreasing Cost industry
Price Elasticity of Supply
Average Product of Labor (APL)
Price elastic demand
4. Exists if a producer can produce a good at lower opportunity cost than all other producers
Collusive oligopoly
Excise Tax
Comparative Advantage
Profit Maximizing Rule
5. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Determinants of Supply
Natural Monopoly
Productive Efficiency
Profit Maximizing Resource Employment
6. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Perfectly elastic
Luxury
Scarcity
7. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Total Product of Labor (TPL)
Marginal Productivity Theory
Unit elastic demand
Cross-Price Elasticity of Demand
8. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Price inelastic demand
Free-Rider Problem
Scarcity
Total Revenue Test
9. The difference between total revenue and total explicit and implicit costs
Economic Profit
Perfectly elastic
Income Effect
Market Economy (Capitalism)
10. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Profit Maximizing Resource Employment
Non-collusive oligopoly
Total Welfare
Price Ceiling
11. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Determinants of elasticity
Profit Maximizing Rule
Average Variable Cost (AVC)
12. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Cross-Price Elasticity of Demand
Income Effect
Implicit costs
Relative Prices
13. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Average Total Cost (ATC)
Oligopoly
Determinants of Demand
Average Variable Cost (AVC)
14. Ed = 1
Unit elastic demand
Increasing Cost Industry
Determinants of Supply
Marginal Revenue Product (MRP)
15. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Four-firm concentration ratio
Law of Diminishing Marginal Utility
Marginal Cost (MC)
Law of Increasing Costs
16. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Law of Supply
Short run
Total Product of Labor (TPL)
Monopoly long-run equilibrium
17. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Monopsonist
Productive Efficiency
Variable inputs
18. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Shortage
Market Economy (Capitalism)
Price discrimination
Derived Demand
19. TR = P * Qd
Total Revenue
Normal Profit
Perfect competition
Fixed inputs
20. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Shutdown Point
Constant cost industry
Normal Goods
Market power
21. 0 < Ei < 1
Dead Weight Loss
Complementary Goods
Necessity
Perfectly inelastic
22. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Accounting Profit
Absolute Advantage
Substitution Effect
23. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Average Fixed Cost (AFC)
Four-firm concentration ratio
Resources
Monopolistic competition
24. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Absolute Advantage
Monopolistic competition
Derived Demand
25. The imbalance between limited productive resources and unlimited human wants
Law of Increasing Costs
Income Effect
Scarcity
Cartel
26. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Productive Efficiency
Shortage
Least-Cost Rule
Unit elastic demand
27. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Dead Weight Loss
Total Product of Labor (TPL)
Non-collusive oligopoly
Relative Prices
28. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Total Revenue Test
Determinants of elasticity
Cross-Price Elasticity of Demand
Consumer surplus
29. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Constant cost industry
Allocative Efficiency
Marginal Cost (MC)
Economics
30. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Perfectly inelastic
Derived Demand
Comparative Advantage
31. Ed = 0 - no response to price change
Marginal Cost (MC)
Marginal tax rate
Perfectly inelastic
Necessity
32. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Inferior Goods
Law of Diminishing Marginal Utility
Substitution Effect
33. The difference between total revenue and total explicit costs
Shutdown Point
Shortage
Accounting Profit
Explicit costs
34. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Complementary Goods
Producer surplus
Accounting Profit
Total variable costs (TVC)
35. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Perfect competition
Price inelastic demand
Total Revenue Test
Excess Capacity
36. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Average Fixed Cost (AFC)
Scarcity
Substitute Goods
37. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Scarcity
Law of Increasing Costs
Substitute Goods
Economic Growth
38. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Accounting Profit
Excess Capacity
Price elasticity
39. AVC = TVC/Q
Constrained Utility Maximization
Private goods
Average Variable Cost (AVC)
Perfectly elastic
40. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Price floor
Constrained Utility Maximization
Constant Returns to Scale
Normal Profit
41. The total quantity - or total output of a good produced at each quantity of labor employed
Private goods
Total Product of Labor (TPL)
Productive Efficiency
Negative externality
42. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Marginal Resource Cost (MRC)
Diseconomies of Scale
Long Run
Dead Weight Loss
43. Total product divided by labor employed. APL = TPL/L
Short run
Average Product of Labor (APL)
Average Total Cost (ATC)
Opportunity Cost
44. The mechanism for combining production resources - with existing technology - into finished goods and services
Determinants of Supply
Production function
Implicit costs
Price inelastic demand
45. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Dead Weight Loss
Specialization
Economic Profit
Law of Supply
46. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Perfectly competitive long-run equilibrium
Scarcity
Total Fixed Costs (TFC)
Inferior Goods
47. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Natural Monopoly
Spillover benefits
Derived Demand
Monopoly
48. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Allocative Efficiency
Marginal Cost (MC)
Positive externality
Cartel
49. The output where ATC is minimized and economic profit is zero
Normal Profit
Price Ceiling
Market Economy (Capitalism)
Break-even Point
50. The most desirable alternative given up as the result of a decision
Income Effect
Opportunity Cost
Derived Demand
Fixed inputs